Expat Taxation

Tax is one of our specializations and if you are an expat with a financial question, we are here to help you for the same. Our tax experts are expert in handling all the tax compliances for expat employees and have necessary experience in this domain.

Meaning

Individuals who are operating in a country (host) different from their home country for a period of

• 1 to 6 months on a short-term assignment
• 6 months to 5 years on a long-term assignment

And will return to their home country once their assignments are completed, are known as expatriate employees.

Expatriates on long-term assignments are often eligible for a number of benefits and deductions from their total income. These are designed to ensure that the employees have same standard of living in their host country as they had in their home country.

Residential status of expat employees

Expats are considered as residents of India if any of the following conditions are satisfied:

• Stays in India for 182 days or more in preceding financial year
• Stays in India for 60 days or more in preceding financial year and for 365 days in aggregate during preceding 4 financial years

Individuals not fulfilling any of the above criteria are considered as non-residents.

Taxation of salary of expats

Amount accruing or arising as salary by expat employees for services rendered in India will be liable to tax in India, notwithstanding the residential status of an expat employee. Tax Deducted at Source (TDS) will also be considered regardless of the location where such amount is actually received.

Inheritance or gift tax for expats

No tax levied on expat's inheritance or gifts, however gift exceeding INR 50,000 received without consideration is liable for tax in the hands of recipient.

Computation of capital gains and taxation norms

• Capital gains derived from the transfer of Short-Term Capital Assets (STCA) other than shares and securities are taxed at normal rates.
• Long-Term Capital Gains (LTCG) for expats are gains on assets held for a period of 3 years or more. Certain long-term gains are exempt for expat tax if gains are reinvested within a stipulated period.
• Capital gains on shares or securities listed on a stock exchange in India are treated differently in case of LTCG or short-term capital gain (STCG)
• Capital gains on unlisted shares and securities are taxable @ 20% plus cess for expats.